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tv   The Profit  CNBC  August 21, 2016 4:00am-5:01am EDT

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sam: come on up toniand have a sample."... man: mmm. lemonis: ...a gourmet marshmallow business operates like one big family... -sam: we're married. -alexa: and this is my father. lemonis: ...and that's exactly the problem. sam: you're coming off like you're saying "[bleep] you" to your daughter, and i'm gonna lay it out. max: i'm not saying that. lemonis: the father of one of the owners has commandeered the kitchen... they're paying more than half the rent and they have 10% of the space. max: they're trying to hustle me! lemonis: ...contaminating their sweets. but they're making marshmallows with onions and garlic in the air? -woman: [ clears throat ] whoa. -lemonis: don't like it? girl: not necessarily. lemonis: ...and poisoning their relationship. sam: it's your dad and you love him, but i need you to be on my side. lemonis: if i can't fix their process... man #2: eight [bleep] pounds! it's not a gallon! lemonis: what just happened? ...and put an end to the drama... dede: i just thought it was gonna be a great opportunity.
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lemonis: ...this whole company will melt down. sam: i have tried to be honest and i have tried to be forthright -- lemonis: you haven't been honest at all. my name is marcus lemonis, and i risk my own money to save struggling businesses. we're not gonna wake up every morning wondering if we have a job. we're gonna wake up every morning wondering how many jobs we have to do. it's not always pretty... everything's gonna change -- everything. ...but i do it to save jobs, and i do it to make money. this is "the profit." let's go to work. [ applause ] ♪ in 2008, award-winning chef alexa lemley and her wife, samantha aulick, started 240sweet -- a handcrafted marshmallow business just outside of indianapolis, indiana. alexa: good morning. have you had our marshmallows before? lemonis: their gourmet marshmallows with artisanal flavors soon earned them a loyal following
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along with mentions in big publications likemagazine, and as the buzz grew, so did their sales, but a questionable rental agreement has affected all aspects of their business, including profitability. sam: jesus christ. what are we gonna do? we have bills to pay. lemonis: and inconsistencies in the warehouse... woman #2: do you think it smells like sauerkraut in here today? lemonis: ...have put 240sweet in a sour situation. woman #3: this is getting a little ridiculous. lemonis: artisan marshmallows are only growing more popular. woman #4: awesome. lemonis: and while there are plenty of small companies already in the space, nobody has managed to win over the masses yet. as long as 240sweet's product lives up to its reputation, i'm confident i can get the company back on track and roast the competition. when the girls at 240 reached out, i was intrigued because i already have a bunch of other sweet options. this would be a great addition. so i'm excited to try their product.
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alexa: hey, look! -lemonis: how are you? -alexa: hi, alexa lemley. lemonis: alexa, nice to meet you. sam: oh, hi. i'm sam. marcus, oh, it is wonderful to meet you. lemonis: nice to meet you. sam: [ sighs ] so, great, yeah, this is dede. -dede: hi, i'm dede. -lemonis: hey, how are you? nice to meet you. what is this up front here? is this a retail store? it is our retail area, shipping and order packing... lemonis: a retail store? really? i feel like i'm walking into a high school bake sale. so what are the roles? you guys are partners? -alexa: with us? yes. -lemonis: yes. -sam: we're married. -alexa: yes. -lemonis: oh, you are married. -sam: yeah. -lemonis: oh, very cool. -sam: thank you. alexa: i do production and sam does marketing and officy stuff with dede and sales. sam: alexa was voted best chef in indiana two years in a row. lemonis: wow. so this is sriracha lime? how many different flavors do you have? alexa: over 200. lemonis: i can't think of any company that has a core product and decides to have 200 different types of them. i think when you're over a certain amount of flavors, it becomes unmanageable. i mean, even baskin-robbins thinks 31 flavors is enough.
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alexa: have you had our marshmallows before? i hope you like them. lemonis: they taste good. i like the texture, but they had a funny smell to them. sam: oh... we've gotten e-mails... sam: we've gotten a couple e-mails about it. lemonis: these marshmallows are good. they have a nice texture to them and they're fluffy and they have a sweet start to them, but as i eat more, it has sort of a funny taste to it... like mustard? it smells like spices in here. how come it doesn't smell sweet? alexa: max. -lemonis: who's max? -alexa: my father. -lemonis: your father. -alexa: m&d marketing. yes. lemonis: how many different businesses are functioning in this building? sam: the marshmallows, and then there's m&d marketing, which is max's spice company. -lemonis: who was here first? -alexa: we were here first. lemonis: the fact that they're sharing space with a spice distributor seems like a really poor business decision. i mean, think about it a marshmallow. it sort of absorb everything just like a sponge would. well, let's take a tour... -sam: okay. -lemonis: ...'cause i have a lot more questions, but i want to see what you're talking about. sam: okay. ♪
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lemonis: so where is your area? alexa: this is our production area. lemonis: what is this right here? alexa: max. from here over is all max. lemonis: you're basically taking up 10% of the building? -lemonis: yes. -sam: yeah. lemonis: and so he pays more than half the rent. alexa: no. -lemonis: what is this? -alexa: mustard. -lemonis: mustard seed? -alexa: yes. lemonis: i mean, honestly, the smell is really strong in here of spices, but they're making marshmallows with onions and garlic in the air? alexa: yes. -max: is this marcus? -lemonis: how you doing, sir? -max: i feel like i know you. -lemonis: how are you? max: how are you? -lemonis: are you max? -max: i'm max. lemonis: what do you make here besides mustard? -max: barbecue sauces... -lemonis: okay. max: sauces. lemonis: when i walked in the building, i smelled the spices. max: yeah. lemonis: how much business will you do a year? max: 30,000 cases a month. lemonis: so you're bigger than your daughter's business. max: yeah, yeah. lemonis: do you worry that you're running out of space? max: it's a little crowded. lemonis: this is all you, too? these are all your bottles? max: yeah. lemonis: and so it's how much a month?
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sam: $2,000 a month. we pay the entire bill and all the utilities, and then max reimburses us what he feels is equitable. -max: it cut their cost. -sam: it raised our cost. -lemonis: it raised your cost. -sam: yes. lemonis: how did it raise it? sam: max hasn't been paying his share of the rents and utilities, and he's up to $10,000. max: no. lemonis: max is strangling this business from several different angles. he's taken over most of their space, which ultimately slows down production. also, he's using more lights, more water, and he's also affected their sales with his spices and his sauces seeping into the porous marshmallow. when you have quality problems, you get more returns and you get less repeat sales, which is a recipe for disaster. max: told alexa right up front -- split the rent. the girls got a little aggressive, especially sam, about that i was trying to hustle them and i thought, "they're trying to hustle me!" -lemonis: i have a feeling... -max: yeah. lemonis: ...and i'm just guessing... max: okay. lemonis: ...that nobody's hustling you.
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your business is growing. you got your stuff everywhere. max: it's a nice problem to have. sam: i think it's a frustrating problem to have. lemonis: the problem in this situation is that they didn't set up the framework of how the relationship was gonna work and they didn't set the boundaries, and human nature is "give them an inch and they'll take a mile." and they gave him an inch and he took the warehouse. sam: he's in control. max: of what? sam: you decide how much room you have. you decide how much rent you pay. it's not an even relationship. max: i am very amenable to conversation, but when one party gets into a hysteric of speech, it turns me off. you know that. lemonis: this tension between this whole family is a bit of a surprise for me. i thought they would've worked that out before i came. how much does this frustrate you? sam: alexa and i -- we don't even want to come to work a lot. lemonis: has it created stress between you two? alexa: oh, yeah. it creates friction, of course.
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lemonis: the reality of it is is that someone's got to go. sam: i think that if i were the enforcer in the issue, it would ruin my marriage. lemonis: so you called me so that i can come be the bad guy. sam: no, but to have someone who's an expert. lemonis: i'm not a consultant. sam: i didn't say you were a consultant. -i said you were an expert. -lemonis: in what? -sam: in business. -lemonis: telling her father that he's wrong? while i want to be helpful, sam and alexa are really the ones that have to deal with this situation with max. they should see me as a potential partner, not some freelance family mediator. walk me through how a marshmallow is made. i'm gonna actually want to make a batch with you. alexa: sure. lemonis: there's sugar, corn syrup, water... alexa: bring it to 240 degrees. lemonis: that's where you got the name 240sweet from? alexa: yes. so get a nice good glob. look at that. all right. lemonis: this is cool. alexa: we try to get as much as we can out. lemonis: just spread it around? alexa: we are gonna coat the top. we're gonna use graham-cracker dust. -lemonis: can we cut this? -alexa: yeah, let's get in.
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steven: so i always line up the edges and i pretty much, like, bench-press motion down on there and go very slowly. make sure you're cutting through the nuts on the other side of the marshmallows. lemonis: but this is kind of a ridiculously slow process. as production cranked up, you would have a bottleneck right here. -alexa: yes. -lemonis: now there's a machine that you can buy that will do it? alexa: 60 seconds. lemonis: how much does the machine cost? alexa: it would be right around $40,000 lemonis: currently, it takes them 20 minutes to do a whole sheet of marshmallows, so in a given typical workday, they couldn't produce more than 24 sheets. with this new machinery, they could do one sheet a minute. in a matter of an hour, they could almost triple the whole day's production. lemonis: and what does it cost to make a sheet like that? alexa: $80. lemonis: well, how many does that sheet break down into? alexa: roughly 70 bags. sam: it comes to, on average, $1.43 a bag, including packaging, with labor. lemonis: what will you sell that bag for? sam: it comes to $6 a bag. lemonis: so the margins are good. sam: yes. we can't keep up with demands from the market.
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lemonis: and so where's the bulk of the -- all these marshmallows are getting made. where are they being sold? -alexa: the internet. -lemonis: the internet. how are you? i'm marcus. -vicki: how are you, sir? -lemonis: nice to meet you. and so all the online orders -come in to you? -vicki: yes. -lemonis: and you ship them? -vicki: yes. lemonis: what's your favorite part of working here? vicki: um... lemonis: what's your least-favorite part? -vicki: the communication. -lemonis: tell me about that. vicki: alexa tells it one way and then sam comes in and interjects. ♪ sam: vicki came to alexa one day and asked her if she had to continue to wear the uniform or if she could wear jeans. alexa: because she was doing something else. vicki: i was working with bleach and i didn't want to ruin my dress pants. alexa: because of that, i said you can wear other pants. sam: we have a uniform. it's black pants. all right? -vicki: i got written up. -sam: i didn't write you up. vicki: i don't have anything in my file? sam: you have things in your file. you most certainly do. [ chuckles ] lemonis: sam comes off very perky and agreeable,
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but it's starting to feel like a performance to me, and it's obvious she has some very sharp edges to her. well... this is a fun place. dede: isn't it, though? [ laughs ] lemonis: how much time do you spend here? dede: 70, 80 hours a week. lemonis: whoa. and do you do a lot of things outside of here as well? dede: i raise money for the american cancer society. lemonis: oh, wow. dede: i was diagnosed with cancer when i turned 30 and i lost my eye. i think that's why i wear my hair like this, yeah. lemonis: are you cleared of cancer? are you a survivor? dede: i am a survivor. it's been 16 years. i know. how about that? lemonis: and you would call yourself a survivor. dede: i do call myself a survivor. lemonis: 'cause you're here kicking ass. dede: right, right. lemonis: do you have financials for this business that i can look at? dede: i do. this is our business plan. -lemonis: you wrote it? -dede: mm-hmm. it's probably a lot more remedial than what you're used to, but... lemonis: no, actually, it's better than most things i see. i mean, you listed out all your competitors.
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you listed out your history. this company did $439,000, and it made 80 grand. and this loan, $60,000 to saps? what is that? dede: saps buffeteria is owned by max. we pay for a line of credit that he took out. lemonis: and so why do you pay its bills? dede: i don't know. lemonis: and max owes you money for rent. dede: right. lemonis: so almost $70,000 has left this business, and the company owes $18,000 for taxes. that $80,000 profit is deceiving, because it doesn't take into account the fact that they're paying max's bills, they're servicing max's debt. that $80,000 is really more like zero. that seems crazy. ♪ i can see the pros and cons of getting involved in this business. on the one hand, alexa's a fantastic chef and she's got great ideas and fantastic recipes. but on the other hand, her father --
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he's screwing it all up. you have a nice business. it's small, but its nice. the challenge is is that you're being taken advantage of by a family member, and so i know that's not an easy solution. alexa: right. lemonis: and so i think the challenge that i'm having is why are you spending your money to pay for debt that belongs to somebody else, who happens to be in this building, not paying his fair share of rent. -sam: it's frustrating. -alexa: it is frust-- lemonis: it's ridiculous. how do i deal with the situation with max? i do believe that you guys kind of called me hoping that i would do your dirty work. i don't know if doing this deal isn't just too sticky... just like the marshmallows were, because there's land mines everywhere. ♪ i just don't know. money's leaving their business to take care of a business that is yours. sam: you're coming off like you're saying
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"[bleep] you, alexa," to your daughter, -and i'm gonna lay it out. -max: i'm not saying that. you say whatever you want to. sam: that's the way it's sounding. max: go to hell.
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lemonis: i don't know if doing this deal isn't just too sticky, because there's land mines everywhere. i just don't know. sam: what if we do sit down with max and tell him to move out?
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lemonis: it does have to be resolved. and you guys need to take care of it, because i do not want to be in between you and your father. -alexa: it's understandable. -lemonis: i came here because i think that the marshmallow idea is a great one. and so my offer is $100,000 for 51% of the business. and that $100,000 would go towards the right equipment and improve this building. -sam: yes. -lemonis: do we have a deal? sam: perhaps we could consider giving 1% to dede. she works like she's an owner. -she is an asset to us. -lemonis: i totally agree. i'm willing to throw 5% in if you're willing to throw 5% in for her. sam: i can live with that. -lemonis: we have a deal? -sam: we have a deal. thank you. lemonis: the other night, sam and alexa and i made a deal for me
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to invest $100,000 into the business. -woman #5: oh, my god. -woman #4: wonderful. -sam: [ laughs ] -woman #4: awesome. lemonis: and the purpose of that money is to innovate the product, and then we need to overhaul the process. i will tell you that, going forward, the set up that exists today -- it doesn't work. two products cannot co-exist in the same space. somebody's got to leave. the offer that i made to them was for 51% of the business. they didn't agree with my number. they said, "we really feel like dede has to be a part of our organization." -dede: [ laughs ] -lemonis: and so, dede, you will be a 10% partner with all of us. dede: oh, my god. [ applause ] [ sniffles ] i can't believe you guys. that's awesome. lemonis: this business is well positioned for success -- really, really well positioned. [ cheers and applause ] let's go to work, okay? see you in a little bit. alexa: all right.
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dede: i can't believe you. [ both laugh ] lemonis: okay, so what i'd like to do is get our recipe book, and i want to look through all 200, and i want to figure out how we're gonna narrow some of them down. and then i want to try some new ideas. -alexa: sure. -lemonis: clear this area so that we have production here. we lost our table? we were here yesterday. does this table not belong? how does this work? sam: it changes a little bit every day, but generally we only have this amount. lemonis: max. is there a way to re-configure a short-term? that that machine can somehow get out of this area? max: i could possibly move this whole thing and take that little back section. yeah. lemonis: but it's already packed. max: well, it could be rearranged. lemonis: we need to get this. you guys need to get this cleaned up. this needs to be our table. i've been an owner of this business for less than 24 hours and i didn't think max was gonna move out tomorrow, but i expected the girls to have a conversation with him, and it was kind of like business as usual. nobody was talking about it, and now i feel like "here we are again."
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it was ridiculous. ♪ i want to go through all of your library and i want to get down to a library of flavors we excel at. tomorrow, we're gonna go to a farmers market. you're having consumers give you feedback, right? -alexa: right. -sam: yes. lemonis: when they give you feedback, then that's what gives it a "chance" to get it into the library. we're only gonna have the top 20. we're not gonna end up with 300 different flavors. let me show you what else i want to do. these marshmallows, we know, are great, but they're boring. and so i want to have different options for people to consume the exact same marshmallow different ways. one of the ways that i'll be able to monetize this investment is to really have them expand the categories -- not the flavors. and whether that's s'more kits or whether that's dipped marshmallows, they have to really expand their variety that they have. i've always been a fan of cake pops. i want to have a marshmallow pop. i want to see three to four variations,
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but i want to see them today. -alexa: okay. -lemonis: okay? alexa: good, good. ♪ lemonis: walk me through what this is. woman #2: that's the marshmallow covered in colored white chocolate. ♪ -lemonis: it's really good. -alexa: good. lemonis: but i don't like that it's pink. woman #3: what do you think of the hot chocolate on a stick? lemonis: now this, i think, is a kick-ass idea. woman #3: this is the cinnamon. so this is our salty caramel, which is our best seller. woman #2: you don't like that one? lemonis: i'm waiting for the salted caramel. alexa: we bumped up the salt and also cooked the caramel a little darker. the marshmallows are so sweet that it does balance out more. lemonis: it tastes like a plain marshmallow. i thought the salted caramel marshmallow, while it may be your best seller, was unimpressive. alexa: it's pretty tasty. ♪
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lemonis: today, we're at the farmers market in downtown indianapolis and we're gonna get feedback from real consumers. good morning. -alexa: good morning. -sam: hi, good morning. lemonis: how are you? now, the purpose of me bringing you here is part of the exercise to pare our flavors down, but rather than us just kind of making it up in our own mind, we'll let the customers tell us. now, people will vote with colors. we'll go with girls are good and boys are bad. alexa: these are handmade marshmallows. we've got snickerlicious, turtle... [ indistinct conversations ] sam: blue if you don't like it, pink if you do. young woman: i think i like that one. lemonis: which one is that? young woman: the cookies and cream. sam: turtle. what did you think? -woman #6: ooh, i love it. -lemonis: cookies and cream. woman #7: that was my favorite. -woman #8: i like it. -lemonis: you do like it? -woman #8: yeah. -man #3: that is awesome. woman #9: this really brings out -- lemonis: this is sriracha lime.
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woman #10: [ clears throat ] whoa. lemonis: don't like it? girl: not necessarily. lemonis: i'd like you to try the salted caramel. can you taste the salt and the caramel? man #4: not so much the salt. woman #11: i would blue ball it. lemonis: you'd blue ball it. okay. ♪ man #5: don't quite get the caramel flavor. lemonis: okay. woman #12: this just taste like marshmallow. lemonis: we had some feedback on the salted caramel. it either wasn't salty enough or it didn't have enough caramel. sam: i wonder if the salty caramel trend is dead. lemonis: no. it's not. that's like saying chocolate is dead. -sam: okay. -lemonis: it's not. yours just isn't good. if it's our number-one seller, we have to get it right. sam: i think sometimes people think i'm angry, but i'm not an angry person. i'm determined and i'm aggressive.
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♪ lemonis: the salted caramel is a huge disappointment.
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if it's our number-one seller, we have to get it right. all right, so let's clean this stuff up and then we'll bring out these new ideas. sam: come on up and have a sample. alexa: s'more, toasted coconut, and just, like, the dry coconut. man #6: yeah, it's really good. woman #12: oh, it's really good. yeah. lemonis: what's your favorite part about it? man #6: it just seems easier to... woman #13: eat. young woman #2: i would perceive them as higher value just because of the sticks. lemonis: i feel like we understand that we have to pare down our flavors, which we're gonna do. the one's on the stick -- you're gonna get more money for it. the stick cost two cents. you can get at least 50 cents more. if the stick costs two cents and you've raised the price of the product by 50 cents, the incremental gross profit is 48 cents. over the course of the year, if you sold 25,000 of them, you'd make close to $12,000 in additional profit all from doing one thing -- putting marshmallows on a stick.
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it's all about the presentation. -alexa: i agree. -sam: we're ready. ♪ lemonis: based on the feedback that we got at the farmers market about the salted caramel, i want to sort of take it to the next step. unfortunately, sam and alexa haven't dealt with their max situation yet, so i have to rent a commercial kitchen, and i have a surprise for them. i wanted to bring someone here that i thought can kind of help us, someone that i thought would be able to help us think about creative ways to make food and who has a lot of chef experience as well. ♪ -sam: [ gasps ] -pete: hi, everybody. sam: look! it's pete! lemonis: pete behringer is a gentleman that i partnered with a couple of years ago. he owns sweet pete's candy, and it's one of the largest candy stores now in america. he's also the king of the salted caramel, and so i wanted to bring him in so he could lend a helping hand. their salted-caramel marshmallow is their top seller.
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her marshmallow recipe, i actually think, is better than yours. pete: okay. lemonis: but i didn't love their caramel base. pete: well, i know a thing or two about caramel. i don't love it. it doesn't have a contrast between salty and sweet. it's just sort of muddled. alexa: i make it fairly salty. lemonis: does it taste salty to you at all? pete: no, it doesn't. it tastes bitter. how much sugar versus corn syrup? -alexa: 4 cups, 1/4 cup. -pete: 1/4 cup of sugar? alexa: no, 4 cups of sugar. pete: to how much... alexa: 1/4 cup of corn syrup. pete: really. what kind of dairy are you using? -alexa: heavy cream. -pete: okay. let's... i'd like to take you through our recipe. we're gonna use sweetened, condensed milk. alexa: i don't know, you know. you just get kind of used to doing it a certain way. pete: do you want to try it and see what it does? lemonis: alexa, can we talk? pete: yeah, here's what you do.
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lemonis: i feel like your energy's a little off. alexa: i usually just have to assess new situations. lemonis: 'cause your energy level changed when he came in. pete: i like a figure-8 pattern when i'm making candy. sam: okay. lemonis: here's the thing that i think is good about having a friend like pete is that it's an extra resource. the goal in our relationship is for me to not only help you guys financially, but it's also to provide you resources... alexa: right. lemonis: ...that you can pull from. alexa: okay, yeah. lemonis: i think what's most disappointing is all along the way i'm sort of getting, "we're not that interested." i have to remind them. i don't just give money. and bringing pete to the table, i thought, would be a big deal. they seem ungrateful about it. pete: now, i noticed that you used beet sugar. -alexa: we do. -pete: is there a reason why? alexa: well, that was the sugar that we started with. -lemonis: what do you use? -pete: i use cane sugar. i've heard a lot of bakers complain, of having used beet sugar, that it doesn't have the same level of performance. lemonis: do you prefer it?
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alexa: i really don't have much of an opinion either way, so it's kind of like we're talking about something that -- lemonis: i feel like you're being dismissive about it and i'm not trying to frustrate you. alexa: no, no, i'm totally down, but i have no preference either way. that's my point. pete: and so we're gonna cook all this together. -do you do that currently? -alexa: no. pete: i think you might get better results. lemonis: i'm watching alexa continue to scowl at pete, and now i notice that i'm getting the evil eye from sam. -sam: no, not at all. -lemonis: you sure? sam: i know that i am awesome and i know that alexa is awesome. i think sometimes people think i'm angry, but i'm not an angry person. i'm determined and i'm aggressive. lemonis: i'm starting to get a little confused, because while we're all trying to figure out how to improve the caramel, she's sort of giving me these warning signals as if i'm doing something wrong. and i'm seeing a side of her that i kind of don't like.
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sam: we hand-swirl the caramel. pete: what would happen if we streamed it? i mean, if it's a disaster, all we're out is a little bit of sugar. marshmallow, unfortunately, takes about six hours to set up, but you're gonna get an idea of how that would taste. ♪ dede: i really like it. pete: yes! lemonis: i love your marshmallow, but i love his caramel. and i think those two things coming together is a good combination. all right, my man. thank you for coming, pete. pete: thank you. lemonis: the fact that we ended with a good product should be proof to them that taking your time and collaborating with other people and having multiple ideas usually ends up with a good result. we've done that today. the question i have is is that gonna continue? ♪ i came in today to finalize the 20 flavors
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we're going to offer... and what i walked into was a [bleep]storm. alexa: there was a little bit of a water explosion. -lemonis: what happened? -sam: max. alexa: the faucet outside -- i thought i had it capped off, 'cause the line had broken. lemonis: holy christopher mary. well, it's good to get the floor mopped up. he didn't know. max: i thought it was coming out from the groundwater. lemonis: what is this, max? max: oh, that was my dust catcher from the machine there. lemonis: oh, that was your -- okay, well, let's get that out of our area. so this mixer belongs to who? sam: that's max's mustard grinder. lemonis: okay, but it can't be over here next to our sugar, blowing in the air, so this has to go somewhere. man #2: it's eight [bleep] pounds! it's not a gallon! lemonis: what just happened? if your business is in trouble and you need my help, log on to...
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it's not a gallon! lemonis: what just happened? alexa: so, that's one of max's main customers, and it sounds like something did not go well. lemonis: you have another squeegee? alexa: just one squeegee. lemonis: let me start from over there. -woman #3: you want to take a turn? -lemonis: yeah. lemonis: i'm beyond frustrated right now. max is still there. his stuff is all over the place. and now there's a flood in the building. this needs to be resolved,
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and the girls need to deal with this right now. we got to get to the point where somebody's sitting down with max and saying, "this is how it's gonna be." that's a big issue for me. who's gonna talk to him? -sam: i can. -lemonis: go talk to him. sam: okay. i will. we need to go talk. so we have to talk to max. alexa: he's trying to actually do some work. sam: we need for you to stand up. alexa: i don't know, sam. sam: we're all going to go down unless we separate from max's spice company. alexa: it's a hard position to be in. sam: yeah. i know it's hard. it's your dad and you love him, but i need you to be on my side. alexa: okay. sam: there's not room in this building for both of us. we need to ask max to move out. ♪ hey, max. we need to talk to you. lemonis: i've said all along that i don't want to be involved in this family drama,
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but what i do want to be involved in is improving the business that i've invested in. these girls told me from the beginning that they were gonna resolve the situation with max, but nothing's happened, and so i'm gonna make sure that they deal with it. money's leaving their business to take care of a business that is yours. they're paying more than half the rent and they have 10% of the space. alexa: that's sort of where we're at and, uh... lemonis: no, that's not sort of where you're at. guys, stop sugar coating it. he's a big man. he's a smart man. he knows. tell him. sam: max, we need to ask you to move out. max: yeah, i've been through this two or three times and have apprehensions about the problems and the cost. sam: max, you got to help me here. you're not coming off well. you're coming off like you're saying "[bleep] you, alexa" to your daughter, -and i'm gonna lay it out. -max: i'm not saying that. you say whatever you want to. sam: that's the way it's sounding. max: go to hell.
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sam: we're not calling a spade a spade. alexa: he understands. sam: and you are exhibiting some more magical thinking and thinking that max is gonna come out somehow and say, oh, the right thing, but he's not gonna say it unless he's made to. -it's gonna be max. -alexa: all right. lemonis: that frustration that she just had... is either gonna come out now or it's gonna come out on you. -alexa: right. -sam: oh, yeah. it's going to. alexa: it's a difficult thing, dad. it is. lemonis: do you know that their relationship is fractured because of you? max: no. lemonis: is that a fair statement? sam: yes. alexa: it's affecting my marriage. sam: you know how alexa and i fight all the time, right? all of the stress is really hard for us, and i know you would never want to hurt either of us because you love us, too. max: no, i don't. and i do understand the stress. sam: so but what we need to hear from you, max, will you move out? alexa: i mean, that's kind of the fair thing. max: i don't want to particularly move, but i would.
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lemonis: okay. all right. good news. sam: all right. ♪ lemonis: i had to leave town for a while to deal with some other stuff, and while a was gone, a lot happened. max moved out and he found a new warehouse. sam and alexa reorganized the entire space. also, equipment was delivered, including a marshmallow cutter which helps them ramp up production. now that i'm back in town, the first thing i want to do is visit max and check on his new space. -hey, buddy. -max: marcus! lemonis: how you doing, my friend? max: how are you? lemonis: is this your new place? max: this is it. lemonis: feels bigger than what you used to have in terms of, like, how much space you have. -max: i feel better here. -lemonis: i go into max's place. it looks like a totally different business. it's organized, things are on the shelf,
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and he seems happy. -lemonis: what's the rent here? -max: i got a better deal, here. -lemonis: are you happier here? -max: yeah. she's a little loud. -lemonis: she's what? -max: loud. lemonis: have you seen her yell at other people, too? max: yeah. yeah. she likes authority. -lemonis: sam does. -max: mm-hmm. she struggles with managing other people. alexa does most of all that, i think. some people -- it's just a matter of showing their authority to make them feel important. lemonis: max is telling me that sam can be aggressive and she has trouble working with others. now, normally, i would sort of dismiss it and chalk it up to him just being bitter that he had to move out, but i've seen traces of that behavior with my own eyes. well, i'm happy for you. i'm happy that you're in a better place. -max: yep. -lemonis: all right, my man. thank you, sir. be good. -max: be good. -lemonis: see you soon. -max: thank you. -lemonis: bye bye. ♪ hey, dede, it's marcus. i was just returning your call.
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today i got a missed call from dede. i'm sorry i missed your call. dede: something happened. sam yelled at me. she sent me ugly messages on my phone, so i told sam i wasn't coming back. lemonis: you're not working there anymore? i wanted to sort of hear from you. dede: sam said it would be a great angle, you know, with my cancer and everything, and it would make you sympathetic to it.
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dede: sam yelled at me. and so i told sam i wasn't coming back. lemonis: you're not working there anymore? dede: life's too short, so i just decided to move on. lemonis: i got a phone call from dede that she left the company. and, to be honest with you, i'm concerned. so i want to talk to her in person. i'm really sorry to hear about this. would you be open to meeting with me just to sort of help me understand what happened so i can at least deal with it and talk to the girls about it? dede told me that she wanted to meet somewhere private, so i have arranged to meet her right outside of indianapolis. so i wanted to sort of hear from you what's kind of been happening. dede: sam didn't like it if you called and i talked to you... -lemonis: about anything. -dede: about anything. lemonis: like, is our payroll gonna be made or is the sales tax paid? -she didn't like any of it. -dede: no. she didn't like the fact that i was letting a man take charge of the situation, and she told me she's an entrepreneur, so she didn't need somebody else telling her
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how to run her business. i was kind of confused, because that's not -how we went into this process. -lemonis: right. dede: but then the straw that broke the camel's back was i had already put in like 80 hours and so i told sam that i needed to go home, and she told me to get back now or she was firing me for job abandonment, and i said "it's not job abandonment when i've already put in my time. i've completed my work. i need to go home. i'm just done" well, then they came in and said that they talked and since i couldn't make a financial commitment that they didn't want me to be an owner. lemonis: so after we made the commitment... dede: mm-hmm. lemonis: ...and you were happy about it, and they seemed happy about it and all that sort of huggy and lovey "i love everybody" -- they basically said to you, "if you don't put money in, -you're not getting anything." -dede: right. right. lemonis: what do you think they ultimately wanted from me? -dede: money and publicity? -lemonis: and that's about it. dede: and to get max out without having to actually do it themselves. -lemonis: have me do it. -dede: yeah, because if it was coming from you, he would go. they also said it would be a great angle,
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you know, with my cancer and everything and it would make you sympathetic to it, so that would even make it more of a good angle. [ sniffles ] ♪ i just thought it was gonna be a great opportunity for all of us. lemonis: after sitting down with dede, this has all become very clear to me. sam and alexa never wanted me to be their partner. what they wanted was for me to do their dirty work and kick max out. and as it relates to dede, they ultimately always planned on taking her 10% back. they were using her as a pawn in the whole process, taking advantage of her as a cancer survivor to get my sympathy. i am totally disgusted. it's not a healthy environment there. without you there, i don't know anybody there to trust. ♪ although i believe dede, it would only be fair of me
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to get sam and alexa's side of the story, so i'm heading there today to see what they have to say for themselves. how are ya? sam: i'm fabulous, marcus, how are you? -lemonis: what's new? -sam: oh, lot's of good stuff. -lemonis: you doing all right? -sam: wonderful. lemonis: i thought it was strange that sam was acting pretty perky, as if nothing had changed or nothing at all had happened. -wow. -sam: let's go see. lemonis: smells like a marshmallow factory now. i don't smell all the spices. what's happening? your hair's different. and guess what you don't smell? max. -alexa: right. -sam: good. lemonis: i would've thought that they would've said something like, "hey, you remember your favorite employee? the one you decided to give equity to that we all loved? well, she's gone." i saw dede. -she quit? -sam: she quit. lemonis: how come you didn't send me a note just to sort of keep me informed that this happened? sam: it never occurred to me. lemonis: okay, and why did she quit? sam: not everyone is set out to be an entrepreneur. lemonis: i thought she was a great employee. alexa: she was a good employee,
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and then we were discussing going to take a loan. sam: it was our understanding that she wasn't comfortable with that. lemonis: did you ask her to sign the paperwork and she wouldn't? sam: no, we did not. we actually still offered dede a percentage without signing. alexa: when we're willing to go sign the paper at the bank, if you're not willing to go to the bank and sign the paper... lemonis: so you guys did ask her to do it. sam: well, yes. we offered her that opportunity. lemonis: if somebody has 10% of a business, like i have employees that have -10% of different business. -sam: uh-huh. lemonis: i don't expect them to sort of sign with me. i just don't. sam: but she didn't feel comfortable that there was any chance that it would not be... alexa: a guaranteed paycheck... -sam: a guaranteed paycheck -alexa: ...every week. lemonis: you said to her, "if i give you equity, you have to understand that there's the possibility you won't get paid some weeks." sam: well, yes. lemonis: just because she was offered equity, she now has to sign up to not get paid? sam: it's a risk as being an owner. an entrepreneur, in my opinion, likes risk.
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lemonis: she started out as an employee getting a paycheck. it wouldn't all of a sudden void out her sort of being an employee and getting paid. what pisses me off about this situation is that there were never any conditions to dede having equity. there was no discussion about her signing documents or giving up her paycheck. they knew that she would cave under that sort of pressure. you knew she was keeping me posted on the company's finances. sam: okay, well i was not aware of that. -lemonis: really? -sam: really. lemonis: i find that very hard to believe. 'cause you and i even talked about it. she was communicating with me on -what my money was spent on... -sam: uh-huh. lemonis: ...and what the current needs still were. sam: okay, so... lemonis: were you aware of that? sam: at that point, yes. lemonis: okay, you just said no a minute ago. -sam: really? -lemonis: yeah. sam: well, i was confused about the question. -lemonis: well, sam. -sam: well, marcus. i know that we see things through our own lens, -so you'll have to excuse me. -lemonis: i don't have a lens. i just see things through what actually happened. sam: now, no one's perfect,
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but i try really hard to make sure that when i get up in the morning, i am the type of person that makes the world a better place. and that is a decision i make. now that doesn't make me perfect. lemonis: i totally get it. sam: i have tried to be honest and i have tried to be forthright -- lemonis: you haven't been honest at all. sam: do you know what? we're gonna be honest. lemonis: good. it's about time. sam: i didn't think we were a good fit for you. i wanted you to come here and help max. thank you for helping with that. you applied to the show for max to solve max's problem. -sam: i did, didn't i. -lemonis: and you took my money. -sam: and i wanted it -- -lemonis: and you took my money. sam: that is moot in this instance. lemonis: yes or no. ♪
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e show for max to solve max's problem. -sam: i did, didn't i. -lemonis: and you took my money. sam: and i wanted it to be good. lemonis: and you took my money. sam: that is moot in this instance -- lemonis: yes or no. sam: that is not what i am explaining. lemonis: what's the answer? the answer is yes. you're saying everybody's not perfect. sam: i don't want to dig down deep and find that person inside of me that could rage up and just eat you alive. lemonis: is there somebody like that? 'cause i think i already met that person. sam: i can act like an ass, yeah. -lemonis: and so my question -- -sam: it's manifesting itself right now. [ sighs ] so... lemonis: there's just got to be a less sort of toxic way to deal with it. sam: so now you're calling me toxic. lemonis: i'm saying that when you don't like things or don't agree with things, you sort of have the ability to deal with things in a toxic way. sam: i don't attempt to be toxic. do you think i'm toxic when i deal with things, alexa?
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alexa: i don't believe you're toxic. sam: cindy, so you think i'm toxic when i try to deal with things? cindy, do you need a job? lemonis: sam, this is a good example of aggressiveness. just chill out. today i feel like i got the real you. we should probably not be in business together. sam: i agree. lemonis: it was nice meeting you. i can't do business here. they were unwilling to make any changes. they were just using me to get rid of max. ultimately, i think sam wanted the publicity. she wanted whatever cash i would bring to the table. she wanted whatever promotion i would bring to the table. she wanted whatever resources i would bring to the table, and she didn't want anything that went along with it. that's the reality.
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♪ a quick-service lobster-roll tonightrestaurantrofit," brings the flavors of new england to the streets of chicago. j: enjoy, so much. lemonis: the owner has mastered the menu... i love the concept, and i love the fact that people are lining up to go there. ...but messed up almost everything else. isaiah: you just blew it and they're not gonna order from us again. lemonis: i'm gonna tell you right now, it's [bleep] up. his irresponsible spending is squeezing the business. meals and entertainment -- $25,000. so you're running it through the business? and his family is tired of footing the bill. j: [ voice breaking ] i want to make this big enough where i can repay him somehow. lemonis: if i can't get him to follow my plan, this company will go under. it's [bleep] up. my name is marcus lemonis, and i risk my own money to save struggling businesses.


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